UK: Diageo H1 profit up, cuts full-year forecast

Diageo has reported an 18% rise in sales and net profit for its fiscal first half, but cut full-year guidance due to weakened economies in key markets.

Diageo said today (12 February) that net profit and reported net sales rose by 18% to reach GBP1.2bn (US$1.7bn) and GBP5.07bn respectively for the six months ended 31 December. Organic net sales rose by 3%, while organic volumes fell by 2%, compared to the same period last year.

A weaker economic outlook in key markets across Europe and North America led the drinks giant to cut its earnings expectations for the full-year, however.

CEO Paul Walsh said the firm expected organic operating profit growth of 4-6% full-year, down from its previously predicted 7-9% range. Organic operating profit rose by 6% in the first half, to GBP1.65bn.

"The global economic slowdown has affected business in the period and in November and December this impact was more pronounced," said Walsh.

He added: "Current economic trends indicate that consumer confidence will reduce further and the outlook for the second half is more difficult to predict".

Diageo's share price fell by nearly 6% at the start of trading on the London Stock Exchange today.

The group's earnings per share for the six-month period rose by 21% to GBP0.45, due to favourable exchange rate movements and a reduction in tax payments.

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